Benchmarks end with modest gain ahead of Q2 numbers; Nifty recaptures 10K mark

Indian equity benchmarks managed to garner marginal gains and ended the Tuesday’s trade in green terrain, with frontline gauges settling above their crucial 10,000 (Nifty) and 31,900 (Sensex) levels, as investors went for value buying in the blue-chip stocks ahead of the festival season. Market participants also remained optimistic on second-quarter earnings starting with TCS on October 12 and Reliance Industries on October 13. After making a positive start, markets traded in a particular range throughout the session to end with modest gains, as sentiments remained upbeat with RBI Governor Urjit Patel’s statement that the economy is recovering, after growth slowed to a three-year low of 5.7 percent in the April-June quarter. He added that the GDP growth will pick up in the third and fourth quarters (of the current fiscal year) to above 7 per cent. Traders also took encouragement with Finance Minister Arun Jaitley’s statement that India can become a much cleaner and bigger economy among the emerging economies as it has the capacity to implement bold decisions and scale them up efficiently.

However, gains remained capped with the Reserve Bank of India (RBI) releasing data that indicates pessimism reigns among consumers and there is less hope for improvement in general economic conditions compared to last year. The RBI’s results of the September 2017 round of the Consumer Confidence Survey, reflecting households’ perceptions and expectations on the general economic situation, the employment scenario, the overall price situation and their own income and spending, showed the Current Situation Index waned further into the pessimistic zone.

On the global front, European counters were trading mostly in red in early deals amid ongoing political uncertainty in the Catalonia region of Spain. Repercussions following the Catalonia region of Spain’s recent bid for secession have been seen from the central government in Madrid. Asian markets exhibited mixed trend ahead of minutes from the most recent Federal Reserve meeting due this week for direction.

Back home, some support also came with Agriculture secretary Shobhana K Pattanayak’s statement that India is headed for a good rabi season despite below normal monsoon rains, thanks to a surge of rainfall in the last week of September that replenished soil moisture. The secretary added that the late rains will benefit planting of rabi crops such as wheat and chana. Adding to the optimism, SBI research report highlighted that India has been reasonably successful in reducing corruption, which has had a positive impact on its economic growth.

On the sectoral front, energy stocks remained buzzing, as the Prime Minister Narendra Modi said that the status of the energy sector in India was highly uneven and the scope for reform in many areas still exists. In an interaction here with oil and gas CEOs and experts from across the world, he welcomed the suggestion made for a comprehensive energy policy. However, realty stocks remained under pressure on report that launches of new homes in top eight cities came down by 33% to 60,140 units in January- September, hit by demand slowdown, but supply of affordable homes rose 27%.  All cities, barring Mumbai, saw a decline in new launches, mostly due to the introduction of RERA and GST implementation.

Finally, the BSE Sensex gained 77.52 points or 0.24% to 31,924.41, while the CNX Nifty was up by 28.20 points or 0.28% to 10,016.95.

The BSE Sensex touched a high and a low of 31,994.77 and 31,896.90, respectively and there were 19 stocks on gaining side as against 11 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.64%, while Small cap index was up by 0.95%.

The top gaining sectoral indices on the BSE were Utilities up by 0.98%, Energy up by 0.86%, Power up by 0.85%, Telecom up by 0.83% and IT up by 0.71%, while Realty down by 0.97% and FMCG was down by 0.24% were the only losing indices on BSE.

The top gainers on the Sensex were Lupin up by 2.15%, Power Grid up by 1.86%, Axis Bank up by 1.74%, Reliance Industries up by 1.52% and Coal India up by 1.44%. On the flip side, ICICI Bank down by 0.96%, Tata Steel down by 0.93%, Hindustan Unilever down by 0.83%, ITC down by 0.82% and Sun Pharma down by 0.50% were the top losers.

Meanwhile, India’s pharmaceutical exports has registered a negative growth of 4 percent during the first five months of the financial year 2017-18, mainly due to increased regulatory issues along with pricing pressure in global markets. Udaya Bhaskar, the Director General of the Pharmaceuticals Export Promotion Council of India (Pharmexcil), has said that the pharma exports to other countries declined by 7.9 percent during the April-July period, while recovered to 4 percent in the month of August leaving the overall growth at minus 4 percent till August this year.

Bhaskar has pointed out that pricing pressure is one of the factors for decline in exports. He also noted that factors such as import alerts by US Food and Drug Administration (USFDA) on Indian plants, regulatory issues and currency fluctuation, also contributed to downward growth. However, he hoped that the overall exports will recover and come into positive zone for the full year as exports are expected to take an uptick from September.

Pharmexcil’s Director General further said that initially, rollout of Goods and Services Tax (GST) regime also created some confusion among the manufacturers leading to stoppage of production by some companies, but now they are seeing some growth. According to statistics, India exported $16.90 billion worth of pharma products during 2015-16 and the same was slightly declined to $16.64 billion in 2016-17.

The CNX Nifty traded in a range of 10,034.00 and 10,002.30. There were 29 stocks in green as against 19 stocks in red, while2 stocks remained unchanged on the index.

The top gainers on Nifty were UPL up by 3.89%, Lupin up by 2.22%, Bharti Airtel up by 1.99%, Power Grid up by 1.89% and IndusInd Bank up by 1.68%. On the flip side, IOC down by 1.09%, Eicher Motors down by 1.08%, Vedanta down by 0.93%, Hindustan Unilever down by 0.92% and Ambuja Cement down by 0.91% were the top losers.

European markets were trading mostly in red; Germany’s DAX decreased 16.33 points or 0.13% to 12,960.07 and France’s CAC was down by 2.35 points or 0.04% to 5,363.48, while UK’s FTSE 100 was up by 14.24 points or 0.19% to 7,522.13.

Asian equity markets made a mixed closing on Tuesday as investors assessed political developments in Washington and awaited cues from the US earnings season as well the minutes from the most recent Federal Reserve meeting due this week for direction. The dollar treaded water on worries over North Korean provocations and amid diminished risk appetite after a top Republican senator sparred verbally with US President Donald Trump. Investors also kept an eye on developments in Catalonia as its President prepares to address the region's parliament on independence. Chinese shares erased early losses to end higher after reports that the government is making efforts to restrain market swings before a key leadership reshuffles this month. Japanese shares rose to close near their highest level in 21 years after the yen weakened over the weekend and Japan's current account surplus figures for August exceeded expectations. Meanwhile, Taiwan markets were closed for a public holiday.